The Next Wave of the Pandemic Apocalypse

The Trump Administration have undermined the social safety net for most Americans with precision and a breathtaking ruthlessness over the past three years. Now you lose your job, then your healthcare and shortly thereafter, your credit rating which impacts your ability to get a job, obtain housing, or medical treatment. This negatively reinforcing loop doesn’t have to be that way and it isn’t in other industrialized countries.  Most Americans can’t make it more than a few months or even a few weeks on their disposable incomes. And our children, many of whom watched their parents grind it out through the mortgage meltdown of 2008 will be witnessing an even greater debacle. What does it mean for the survival of our nation if our young people feel hopeless?

This table lists components of the social safety network in a pre-Covid-19 pandemic state comparing the three-plus years under the Trump Administration to the state of the nation he inherited from in 2016.

Criteria	Trump Actions Since 2017	Impact on Individuals
Access to healthcare requires a nondiscriminatory environment, a national effort, and funding-All of which were provided under the Affordable Care Act known as Obamacare AND are also part of Medicare	Funding for the Affordable Care Act has been cut by reducing non-participation penalties and eliminating the 3% medical device tax; A Supreme Court case is pending regarding the legality of the act because the penalty for not having insurance was nullified in 2017. Republicans have stated their goal is to gut Obamacare	Affordable Care Act provides subsidized medical insurance to 8.6 million households, down from 9.6 in 2016; due to Trump’s cuts in promotion of the program and funding; Despite Trump actions more states have opted to expand Medicaid access to the ACA standard, which is 133% of federal poverty rate
Uninsured population	In 2016 the US Census found 27.3 million had no insurance; no action has been taken to provide affordable healthcare in the Trump Administration	In 2019, 30 million people were without insurance; health insurance gains are reversing
Employment security	Unemployment rate in 2016 was 4.7%	Unemployment was 4.4% in January and as of the end of March 2020 was 13.1%
People in Poverty	40.6 million in poverty in 2016; Trump cut funding for school lunches and made it harder for families to qualify; In 2016, 22.1 million children received subsidized school lunches	38.1 million in poverty in 2019; 29.7 million children and youth receive school lunch subsidies in 2020; school closures mean they don’t eat
Affordable housing	549,928 people were homeless in 2016	US Census for 2020 finds 3.5 million people are homeless

Looking at the trends from the corona virus Covid-19 pandemic this table shows the impact on social safety systems in the current state, which is the Trump Administration under the Covid-19 siege.

Criteria	Current state Trump Admin	Pandemic forecast
Access to healthcare	56% get health insurance through their employer; roughly 159 million people	For those who can’t afford to pay their COBRA or private healthcare premiums after job loss, this could result in another 47 million uninsured people
Uninsured population	30 million	Estimated to rise to 40 million
Unemployment rate	15% as of April	Expected to reach 30%, the question is for how long and how many businesses will go under
People living in poverty	38.1 million	This number will explode when unemployment benefits expire and there are no jobs
People who are homeless	3.5 million	This number will skyrocket once the evictions start

Colossal Job Loss

Large businesses (airlines,Boeing) are currently being offered federal subsidies to try and stave off job loss, thanks to the Democrats who argued for these provisions in the federal lifeline. Initially Treasury Secretary Mnunchin wanted to offer funds without strings or public transparency. Small businesses are only being offered loans which they must pay back and their ability to do so is vague at best. Small businesses can’t go for months without normal operations, let alone take on a new debt. Small businesses employ more people than large corporations, so this could have a devasting impact on employment throughout the country. Also, small businesses lack access to affordable capital and typically invest their life savings to start their enterprises. Small businesses finance themselves at much less attractive rates than large corporations, who get a point-over-prime versus the small ones who use their credit lines at 10% or worse yet, take on credit card debt at 25% APR. Whereas, large companies rely on equity markets, meaning other people invest in their organization, they do not risk their own capital. Corporate executives don’t lose their homes, they may lose a bonus.

Impact on the Self-Employed

There are at least thirty million self-employed people in the US, which is a result of the decades long corporate gutting of jobs, to be replaced by workers who have no protections, no unemployment compensation, and no healthcare. (Microsoft started this trend and ended up settling a Department of Labor action because of it). Contract workers do increase profitability for companies, but at their own peril. Democrats argued for inclusion of self-employed workers in the pandemic unemployment compensation, which will help hourly wage earners, like Uber drivers, but won’t help small business owners who draw 1099 self-employment compensation. If you are a small business, like a C or LLC Corporation, nonpaying customers doesn’t mean you, as owner are unemployed. I suppose if a business lost all of its customers then the owner would be considered unemployed.

Irreparable Financial Devastation for Many

Only 10% of the iceberg is visible above the water line and there are pillars of the US financial system which depend on stability and these are the pension funds and a huge swath of private employer healthcare plans, which are self-insured.

Potential Failure of State and City Pension Plans

Pensions require financial solvency to pay their future obligations to retired workers and if entire industries fail, this ability could be destroyed. The Pension Benefit Guaranty Corporation, which is a US mandated watchdog for pension solvency, has a limited amount of funds to cover bankrupt pensions and it would not be able to withstand massive industry failure. In other words, pensioners may receive reduced benefits or stop receiving them.

Solvency of Self-Insured Medical Plans

For self-insured health plans, which have been purchased by firms with as few as fifty employees, the ability of those businesses to pay escalating medical claims when they are experiencing severe business downturns is questionable. Self-insured health and welfare plans are exempt from state regulation because of a 1976 federal law called ERISA, which means employees have no state protection agency to help them with late paid or unpaid medical bills.

Down Stream Impact

Any significant impact on the healthcare safety net impairs services for a community and Covid-19 is vividly illustrating the communities which were prepared and those that were not. Since the US healthcare system is based on a pay-for-service unrationed reimbursement methodology, all healthcare decisions are determined based on who pays. In the early weeks of the Covid crisis President Trump expressed concern about who pays for the testing, which delayed testing for weeks, dramatically increasing the spread of the airborne disease. In Korea, Australia, and Germany the question wasn’t who pays, because they have national healthcare systems. Those nations coordinated national efforts to arrest the disease quickly and as a result are not experiencing the job losses of the US. Further, in other advanced industrialized nations it is unthinkable for companies to be able to fire their workers to improve profitability. These nations require private companies to pay into job retraining funds, severance, and other social benefits to provide employment stability. The US has chosen to have an unstable workplace because it benefits Wallstreet, not the workers. If you look at real increases in household income, the increases are fractionally higher than they were forty years ago. Inflation adjusted gains in household income have decreased under the Trump Administration from a high of 5.2% of 2015 to 1.7% in 2017. Meanwhile the top 5% have experienced explosive income growth. The CIA Factbook ranks the US 40^th in income inequality worldwide and at the bottom for industrialized nations.

It is easy to see why Elizabeth Warren and Bernie Sanders have such a strong following among reform minded voters, because nothing illustrates the inequities of the US financial system and the tattered social safety net than the Covid-19 pandemic, which has been mismanaged by the Trump Administration from the start. As King Louie said, “heads will roll,’’ hopefully with the 2020 election.

This article was written by Roberta Winter, a healthcare analyst and freelance journalist and author of Unraveling US Healthcare-A Personal Guide. https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972